Changjiang: Three major businesses have all made breakthroughs, maintaining a "buy" rating for LENOVO GROUP (00992).

Recently, Changjiang released a review report, stating that LENOVO GROUP (00992) has shown remarkable performance in FY2025 and Q4, with all three major businesses breaking through, maintaining a "buy" rating. The review of the business lines is as follows: IDG business shows steady growth, with various non-PC products flourishing: In FY2025, the company's IDG department achieved a revenue of 364.7 billion yuan, a year-on-year increase of 13%; operating profit margin reached 7.2%. As the cornerstone business of the company, PC revenue increased by 11% year-on-year in FY2024, market share increased to 23.7%, surpassing the second place by 3.6 percentage points. In the fluctuating consumer electronics demand situation, the company continues to demonstrate steady growth advantages as a leader. In FY2025, the revenue share of non-PC businesses reached 47%, a year-on-year increase of 5%, including: (1) revenue from smartphone business increased by 27%, reaching a historical high, with the Asia-Pacific region growing by 179% and Europe-Middle East-Africa region growing by 32%, mainly due to the outstanding performance of high-end model razr foldable screen sales; (2) tablet PC sales in FY2025 increased by 15% year-on-year. Looking ahead, 2025 is the first year of global promotion for the company's AIPC, with new outbreaks of products such as smartphones and tablet computers, and the company's "multi-end" ecosystem continues to enrich. ISG business shows a trend of continuous profitability, with the proportion of SSG business solutions continuously increasing: In FY2025, the ISG department achieved a revenue of 104.8 billion yuan, a year-on-year increase of 63%, reaching a historical high, and achieved profitability for two consecutive quarters after turning losses from the previous quarter. Looking separately, cloud infrastructure business (CSP) revenue exceeded 10 billion US dollars, a year-on-year increase of 92%, with significant breakthroughs in both domestic and overseas customers; enterprise infrastructure business (ESMB) revenue increased by 20% year-on-year, reaching a historical high. In FY2025, the SSG department achieved a revenue of 61 billion yuan, a year-on-year increase of 13%, with an operating profit margin continuing to maintain a high level of 21.1%. The proportion of solutions and "as a service" reached 58%, a year-on-year increase of 4 percentage points. LENOVO GROUP firmly grasps the trend of the AI era, gradually forming a "one-stack" service system for various types of customers with infrastructure + solutions. In terms of strategic layout, the trend of AIPC is unstoppable, and there are no worries about global head tariffs. On May 8, Lenovo Innovation Technology Conference released the Tianxi super intelligent personal assistant, further strengthening the autonomous cognitive decision-making ability of AIPC and highlighting Lenovo's advanced concept of building AIPC as a personal assistant. The recent tariff disturbances have affected Lenovo's production capacity allocation, but in the long run, Lenovo has ample experience in dealing with tariffs and geopolitical risks, with sales regions and production capacity distribution covering all major continents globally. With the acceleration of AIPC penetration in the second half of the year and continuous increase in AI server orders, it is expected that Lenovo will continue to leverage its leadership advantage in AI cloud collaboration, with forecasted net profit of 16.65/19.16/22.14 billion US dollars in FY2026-FY2028, maintaining a "buy" rating.